| COMPANY |
Five Below, Inc. |
| COURT |
United States District Court for the Eastern District of Pennsylvania |
| CASE NUMBER |
24-cv-03638 |
| JUDGE |
The Hon. Gerald Austin McHugh Jr. |
| CLASS PERIOD |
December 1, 2022 through July 16, 2024 |
| SECURITY TYPE |
Common Stock |
LEAD PLAINTIFF DEADLINE IS SEPTEMBER 30, 2024.
If you have suffered losses and would like to discuss your rights, please fill out this form or you may contact Jonathan Naji, Esq. at (484) 270-1453 or via e-mail at info@ktmc.com.
Case Background:
The Class Period begins on December 1, 2022, the first day the markets were open for trading after Five Below held a conference call with analysts on November 30, 2022, to discuss the company’s earnings and operations for the third quarter of 2022. During that earnings call, Defendants presented strong financial results and growth, including at Five Below’s newly opened stores. Defendants also discussed Five Below’s strong execution of its business model. For example, Defendant Anderson, Five Below’s former CEO, boasted about the “great progress” Five Below had made “on several initiatives in the third quarter,” and assured investors that Five Below was “in a great position for the fourth quarter” based on Five Below’s ability to “offer the extreme value our customers need to help alleviate macro pressures.” Defendant Bull, Five Below’s interim CEO, buttressed these statements by representing Five Below’s ability to “move quickly to adjust to changing customer preferences.”
Throughout the Class Period, investors were keenly focused on Five Below’s ability to execute on its business plan in the face of potential macroeconomic headwinds following the COVID-19 pandemic. The market also questioned whether Five Below’s business may have been pressured by increased rates of lost or stolen inventory, known in the retail industry as “shrink,” because, among other things, Defendants often attributed disappointing financial results to shrink. During the Class Period, Five Below executives repeatedly affirmed the company’s ability to execute on trend-right products, and often attributed pressure on earnings to shrink and macroeconomic factors.
These assurances were false. In truth, Five Below was struggling to identify and capitalize on trending products, and the company’s growth plan was stalling. Rather than admit that Five Below was struggling to identify and market profitable trends, Five Below executives repeatedly blamed the company’s disappointing financial results on elevated levels of shrink and other macroeconomic factors, while assuring investors that Five Below’s growth and sales remained intact. As a result of Defendants’ misrepresentations, shares of Five Below common stock traded at artificially inflated prices during the Class Period.
The truth began to emerge on March 20, 2024, when Five Below reported fourth quarter 2023 results and missed Earnings Per Share analyst consensus by $0.13 per share, or approximately 3.5%. These disclosures caused the price of Five Below stock to decline by $32.18 per share, or over 15%. Despite these disappointing results, Five Below’s senior executives continued to downplay broader problems with the company’s business and blamed the disappointing results entirely on greater than expected levels of shrink. Indeed, Defendant Anderson told investors that the negative results could be “fully attributed to higher-than-planned shrink.”
On June 5, 2024, however, Five Below released its first quarter 2024 results and disclosed a nearly 15% year-over-year decline in operating income, and made what analysts described as “deep cuts” to its sales guidance for the remainder of the year after first quarter sales “fell short.” As a result of these disclosures, the price of Five Below shares declined by $14.07 per share, or approximately 11%.
The following month, Five Below revealed that its financial and operational problems were significantly worse than represented. On July 16, 2024, after the market closed, Five Below announced the sudden departure of its CEO, Defendant Anderson, effective immediately, and further reduced its net sales and earnings guidance, which had already been severely cut just weeks prior. These disclosures caused Five Below’s stock price to decline by another $25.57 per share, or 25%. Analysts subsequently reported that, in their conversations with Five Below following this announcement, Five Below’s management admitted that the company had “incurred a lot of self-inflicted wounds” and “needed to refocus their product on ‘trend right’ goods and strong value,” which stood in stark contrast to Defendants’ prior representations.
What is a Lead Plaintiff?
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.